Egyptian public-sector wage cap issue remains in limbo

Despite government promises to contrary, public-sector maximum wage will most likely not be implemented next month

Public-sector wage cap reform once again appears to be dogged by uncertainty after Egypt's Cabinet announced last week that it would set the national maximum wage at 35 times the minimum wage of a third-grade employee at the same government body, effective as of next month. It now appears, however, that the declaration was simply intended for local consumption, and that the announced timeline would likely not be respected.
“I don't know exactly when the maximum wage will be imposed,” Safwat El-Nahas, president of Egypt's Central Agency for Organization and Administration, said. “The draft decree must be approved by the ruling Supreme Council of the Armed Forces.”
But Egypt's military rulers appear to be dragging their feet over the issue without providing an explanation. Neither the government nor the military council has officially declared that the decision would be postponed, while the finance ministry has refrained from offering any additional information.
If the draft decree is ever approved, maximum public-sector salaries would be set at between LE29,000 and LE70,000 per month. According to El-Nahas, the minimum wage of a third-grade public-sector employee ranges between LE834 and LE2000 per month, depending on the government body.
El-Nahas attempted to explain why the government is not calculating maximum salaries on the basis of a minimum wage set at LE700. “The LE700 minimum wage is for employees without university degrees who are entering the labour market for the first time,” he said. “This category isn't a reference for evaluating maximum salaries.”
The amount that will be saved in the state budget by this decision has not been revealed, even though its stated aim had been to redistribute income in the public sector. "I honestly don't know the maximum income in the public sector," said El-Nahas.
It is estimated that less than 20,000 civil servants will be affected by the first phase of the initiative, as the public sector has 14,000 general managers and deputy secretaries in various ministries, in addition to ministerial advisors and their assistants.
According to the draft decree, the second phase will apply the decision to particular professional cadres, such as teachers, doctors, university professors, police, etc. As for the initiative's third phase, this will involve the overall restructuring of salaries.
Setting a national minimum and maximum wage had been one of the primary demands of Egypt's January revolution. Following the uprising, however, the notion of setting a maximum wage encountered considerable resistance, especially at public-sector banks. Central Bank of Egypt (CBE) Governor Farouk Al-Oqda has openly stated his refusal to implement the measure at banks, while public-sector bank employees have staged demonstrations against the application of wage caps.
Such pressures appear to have borne fruit, since, according to the draft decree, the measures will not be applied at the CBE, public banks and insurance companies.